Recently, the Council of Ministers has approved the 2030 Sustainable Development Strategy, which includes among its goals the creation of a universal parenting benefit of 200 euros per month for each descendant under 18 years of age. The stated objective is that this new benefit reaches all families with children in their care and contributes to eradicating the most severe forms of child poverty in 2030. Spain registers one of the highest rates of child poverty in the European Union. Almost 30% of minors are at risk of poverty, ten points above the population as a whole. This gap, furthermore, has widened and become chronic, in contrast to the vigor of economic growth. In previous expansionary phases, the increase in employment acted as a drag mechanism for these households, constituting their main source of economic security. That this process is not being reproduced in the current expansion phase highlights the insufficiencies of our social protection model. The greater vulnerability of childhood is also confirmed by other indicators. One in six minors lives in households that suffer delays in the payment of housing-related expenses, such as mortgage or rent, energy supplies or community fees. This indicator has increased by 50% since 2019. In the short term, the combination of lower income growth and an increasingly inaccessible housing market places them in a position of special risk in the face of possible slowdowns in the economy. In the long term, having suffered poverty at this stage has serious consequences on educational, employment and health opportunities, which contributes to reinforcing its intergenerational transmission. This not only reduces opportunities for access to qualified jobs, decent wages and other basic dimensions of well-being, but also weakens the social and productive fabric of the country. Combating this situation is, therefore, a question of both social justice and economic efficiency. Our 2023 estimates for the High Commissioner to Combat Child Poverty showed that maintaining such high levels of child poverty comes at a high cost. In a very conservative assessment, child poverty cost Spanish society more than 63 billion euros annually in lost productivity and costs associated with health problems, which is equivalent to 5.1% of GDP, a figure significantly higher than the average annual growth rate of the economy. In this context, it is essential to analyze which policies can be most effective in changing course. The child protection policies in force in Spain are characterized by a very low level of spending compared to other European countries, which limits their impact. On the other hand, targeted benefits introduced in recent years, such as the child support supplement (CAPI) of the Minimum Living Income (IMV), face significant difficulties in reaching potentially beneficiary households. In the European Union, the most widespread policy is the universal child-rearing benefit. In Spain, on the other hand, the main instrument of support for families continues to be the minimum personal income tax for descendants, a non-refundable deduction in installments that fundamentally benefits households with medium and high incomes, and excludes the most vulnerable. According to the White Paper for tax reform, nearly three million taxpayers with descendants under 18 years of age cannot benefit from this minimum due to the insufficiency of their taxable income. Converting it into a refundable allowance would be a first step in the right direction. However, there are other more ambitious and potentially more effective reforms, such as doubling the amount of the CAPI and changing its distribution by age, or complementing the existing system with a universal benefit of 200 euros such as the recently announced one. This would bring us closer to the model already implemented in nineteen European countries. The CAPI reform could significantly reduce poverty if it effectively reached the four million potentially beneficiary boys and girls, with reductions of up to 22% in its incidence and 36% in its intensity. Both the universal benefit and the conversion of the minimum for descendants into a refundable deduction would have much greater coverage, reaching 8 and 5.6 million boys and girls, respectively. The conversion of the minimum would have a low cost, but also a limited impact, with reductions of 3.6% in the incidence and 7.3% in the intensity of poverty. A universal benefit that is received by default and is around 200 euros per month would be the measure with the greatest impact, with a potential reduction of 21.5% in the incidence of child poverty and 45% in its intensity. If it were considered taxable income, it would have an approximate cost of 11,000 million additional euros (0.65% of GDP) compared to the current system, compared to the 6,300 million (0.37% of GDP) that reforming the CAPI would entail. Although it implies a greater budgetary effort, its main advantage is that it would eliminate access barriers for the most vulnerable households, reduce the bureaucracy associated with means testing and reduce the risk of fraud. Added to its greater administrative simplicity and lower management costs is the greater social legitimacy of universal policies. It is about the recognition of the right of all boys and girls to receive sufficient protection that promotes equal opportunities. In universal systems, all people have access to rights, while the effort involved in financing them is distributed through progressive taxation. It is urgent, therefore, to dedicate more public resources to the fight against child poverty to promote equal opportunities. The proposed investment represents less than a sixth of the economic and social cost of not putting it into practice. Luis Ayala is Professor of Economics at UNED. Olga Cantó is Professor of Economics at the University of Alcalá.
